Kenya’s government has scrapped a plan to fully nationalize the partly state-owned airline and is looking at other ways to safeguard money it has loaned the carrier, according to the International Monetary Fund.
It will cost a projected $1 billion to restructure Kenya Airways Plc and an injection of the funds by the state will be “unavoidable” as the East African nation’s Treasury has already guaranteed $750 million of debt owed by the carrier, the IMF said.
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“The authorities do not intend to nationalize the carrier and are considering appropriate mechanisms to protect the exchequer’s financial interests during the restructuring process,” the Washington-based leader said in a statement issued after its second review of the nation’s extended-credit facility.
KQ, as the airline is known, needs a radical overhaul of its business model to minimize the burden it places on the state given challenges threatening the aviation industry in the post-pandemic environment, the IMF said. Changes required include cutting back on its operations and staff, enhancing efficiency, and renegotiating leases and suppliers’ contracts, it said.